Agency Theory in Mathematics Perspective

Abstract

The aim of this paper describes the agency theory in mathematics perspective. The facts are the corporate agents have been given authorization to manage the corporation from the owner as a principal party. The corporate agents can be controlled by the contracts designed through compromising or expected result (outcome) from the principal. The contract has been designed to conduct the agents must provide some efforts to principals. Based on this phenomenon, the mathematics can depict the relationship between the principal and agents. Rationally, the agents usually take the opportunity on inability to monitor in details from the agent’s effort by maximizing the agent’s expected utility from information asymmetry.